“Have you heard about the crisis?”
From a recent conversation with my colleague.
Well, of course we’ve heard about the crisis. I’m one of three partners who run a software boutique, and in early September, I did realized that something was very wrong with the economy. Back then, we’ve deposited a check from one of our customers, a very large enterprise. A week later, we’ve got the message from the bank – the check bounced. That company went belly up.
This was an iron clad proof that this is not just a temporary recession. A friend of mine runs another business – he makes crowns and bridges. He makes fake teeth. He often complains about bounced checks from doctor offices, but our case was different – this was not a doctor’s office.
There is a popular definition: “Recession is when your friend got laid off. Depression is when it happened to you”. To rephrase, “Recession is when small businesses have bounced checks, depression is when it happens with the large ones”.
There were some other negative signs – postponed software projects. We were about to start several projects with large companies, but they got postponed till better times.
That being said, luckily, we were quite busy all year and already have a queue of interesting projects for the next year. I’d like to tell you a little bit about our way of running business.
We are a small company with three main activities:
1. Consulting in the RIA development that involves Adobe Flex and AIR
2. Conducting training
3. Software development
The first two activities bring the money in. Our software (productivity tools for Flex developers and a Web reporter) is given away for free – this is how we show our potential customers that if we can do this stuff, the chances are very high that we’ll be able to program their order tracking system without too much sweat. This is a proof that we are a low-risk partner.
Let’s talk about the first two activities. How do we sell our services? Guess what, we don’t have sales people. None. Zero. Instead of spending hundreds of thousand of dollars for multiple attempts to hire THE RIGHT salesman, we decided to heavily invest into PR and building our own brand. By the way, we didn’t hire a PR person either. We blog, we write technical articles and books, we speak at large conferences and in front of a small group of people at Flex or Java users group sessions.
Our company doesn’t have overhead. Other than a part time office manager who does the invoicing and sends out post cards during holidays, part time accountant and outsourced payroll company for fifty bucks a month, everyone else is billable almost all the time.
For example, if I’m not busy working for a customer, I spend my time writing the next chapter for the upcoming O’Reilly book. Moneywise, writing a technical book is like working for one dollar per hour. But hey, it’s still billable hours isn’t it?
Writing technical publications is different than writing a Harry Potter book (I wish I could do this). The money you make from selling technical manuscripts is very hard earned dough. But books have very good side effect as long as you are not writing for the “XYZ …for idiots” series. Our books show that we are well researched in the RIA space, and having one us on the project will secure the management a couple of extra hours of good sleep at night. We are low risk and low maintenance partner.
You may say, “Yakov, just cut the crap and stop bragging, will you? Let’s talk turkey. Can we afford you?” I’m glad you’ve asked. And let me tell you why we call 2008 “A year of small customers”.
About six months ago, the office phone rang. The person introduced himself and said that his company needs some help with their Flex project. He wanted to meet.
I asked, “Where are you located?”
“I’ll be in the area on Friday, and we can meet. Where?”
The guy gave me directions… to a Starbucks located in a so-and-so shopping plaza. He started the conversation saying that when he dialed our company’s number, he was ready for an answer like “We don’t work with small companies”. This tiny business owner sounded very appreciative and explained that he hired two Flex consultants located somewhere in Mid-West, who are already developing an application for a large company here in Jersey.
The rest of the story was typical. Flex is very easy to get in, but after a while it became unclear how to do things properly. This meeting at Starbucks turned into a productive partnership. They got from us a very senior Flex developer/architect from Eastern Europe at a very affordable rate. And the good part is that their checks don’t bounce.
We have several other small businesses that use our help and are pretty happy with this partnership. This doesn’t mean that if you have a multi-million dollar project lurking ahead, we can’t handle it. We did it before, and we can do it again. Even though we are keeping a small number of permanent software developers on staff, over the years we’ve established great relations with a large software company in Eastern Europe. We trust them and they trust us.
If we need to quickly ramp up a team with various skills, we can do it within a short lead-time. When the project is over, the team boards the large mother ship again, and we remain agile. Some customers don’t mind having developers overseas, but prefer to have a technical leader and the main point of contact here in the States. No problem, we offer so-called blended rates. You are getting 10-20% of my time and 80-90% of the job is done remotely using daily emails, instant messaging, conversation over Skype and screen sharing. Don’t forget, that we guarantee that all major technical decisions made on your project will be carefully reviewed by us, and the offshore developers are top notch. These arrangements make the whole engagement attractive and affordable.
Running technical training is yet another way to get new customers. We fly all over the world to conduct Flex training for private customers. During the week of training, attendees can clearly see that we’ve learned our stuff not from the books.
This week signed a contract to run certified Flex training class for a client in Texas. How do you like this clause from that contract: “Overall instructor’s scores must exceed 7.5 on a 9 point scale, or equivalent thereof. Evaluations falling below this criterion will result in reduced or zero payment for instruction depending on the shortfall below previously stated guidelines.”
When I read this statement first, I said to myself, “I’m going to pass on this one”. I know that I’m a good instructor, and people usually enjoy my classes. But hey, you never know. What if some students just don’t like my personality and will give me lower grades? Bat after a couple of minutes of hesitation, I signed the contract. It’s a challenge, I know I can do it, and I’m up to it.
After re-reading this blog post, I realized that it sounds like a thinly veiled marketing spiel. Sorry, man, gotta do it. Remember, we don’t have sales people, but, somehow, we need to send our message to the respected RIA world, “Just give us a call, and we’ll figure something out”.
We don’t complain about the business in 2008 and hope that 2009 will be even more prosperous for everyone.
Marry Christmas, Happy Hanukkah, and Happy New Year!